FedEx and UPS dip after report on Amazon's delivery concept

Bloomberg, citing anonymous sources, wrote: "Amazon will oversee pickup of packages from warehouses of third-party merchants selling goods on Amazon.com and their delivery to customers' homes, the people said - work that is now often handled by UPS and FedEx".

Amazon (AMZN) is developing its own delivery service, according to reports, prompting concerns about the businesses of shipping-giants UPS (UPS) and Federal Express (FDX). In some cases, it will also handle delivery to customers, eliminating the major delivery partners of UPS and FedEx.

The new experiment is meant to make more products available for free-two day shipping and relieve overcrowding in its warehouses, Bloomberg reported. This service began on a trial basis on the West Coast earlier this year, expanding further in 2018. Amazon had started its own delivery service two years ago in India. Customers may see their favorite third-party sellers jumping ship rather than be consumed by degrees by Amazon.

He told analysts that the overwhelming majority of business at FedEx is from business to business as more than 85% of its business does not have anything to do with online sales or e-commerce.

Bloomberg reports the name of the program is Seller Flex, and it is another example of Amazon's push to help third-party sellers speed up their deliveries.

Bloomberg Intelligence's Charles Allen added that Amazon has lower "drop density", or having many delivery points close together, than FedEx and UPS, which could be a disadvantage.

The company confirmed on Tuesday that it signed a lease for the entire office portion of a planned downtown skyscraper that will become the second-tallest building in the Pacific Northwest, the Seattle Times reports.

The project underscores Amazon's ambitions to expand its logistics operations and wean itself off the delivery networks of UPS and FedEx.

It launched Amazon Flex, which uses independent contractors driving their own vehicles to deliver packages from Amazon shipping hubs, guided by a smartphone app.

The program referenced by Amazon is Seller Fulfilled Prime, a service that lets third-party sellers slap the Amazon Prime two-day shipping badge on their products, with the caveat that they must meet Amazon shipping requirements.